April 17 (Bloomberg) -- Remy Cointreau SA fell the most in
more than four months after the maker of Remy Martin cognac said
fiscal full-year earnings slumped and reported sales that fell
more than analysts anticipated on lower demand in China.

The stock fell as much as 6.6 percent, the steepest
intraday decline since Nov. 26. Adjusted operating profit
probably fell 35 percent to 40 percent in the 12 months through
March, the company said today. Citigroup and UBS analysts had
estimated a 33 percent decline.

Measures by Chinese President Xi Jinping’s government to
restrain spending on gifts and banqueting have been weighing on
sales of cognac in the country, particularly expensive blends.
Remy said in January that it expected no relief from the Chinese
New Year festival, a key gifting period, which occurred in the
final three months of the fiscal year.

“Recent events in China are not a blip but instead mark a
structural change in the market,” Jonathan Fyfe, an analyst at
Mirabaud Securities LLP, wrote in a note to investors.

The stock traded 4.1 percent lower at 60.41 euros at 10:44
a.m. in Paris, where the company is based.

Sales Drop

Full-year sales slid 11 percent on an organic basis, which
excludes acquisitions and currency shifts. Analysts expected a
9.7 percent decline, according to the median of nine estimates
compiled by Bloomberg.

The company said it’s pursuing a “destocking effort
against the backdrop of further stringent measures to restrict
conspicuous consumption” in China. Organic revenue declined 16
percent in the fourth quarter as cognac sales plunged 32
percent.

Diageo Plc, the world’s biggest distiller, also said today
that results were hurt by the Chinese government’s crackdown on
sales of luxury liquor. Its shares fell as much as 5.1 percent
in London trading. Pernod Ricard SA, the French maker of Martell
cognac, fell as much as 3.6 percent in Paris.

Remy Cointreau had said it anticipated a “significant
double-digit decline” in profit in the 12 months through March.
The company is scheduled to report full-year earnings June 5.